BANK-CREATED MONEY

Otago Daily Times, Issue 21543, 15 January 1932, Page 8

BANK-CREATED MONEY

TO THE EDITOR. Str—Copies of the Otago Daily Times have been sent me in which appear correspondence on the above subject, and relating also to the Douglas Social credit proposals. It is very gratifying to me, as one who has been spreading this new economic gospel for the past 10 years, to see such interest aroused iu the matters of economic finance. • Here, in Brisbane, a 100 per cent. Douglas candidate, quite unknown, with but a little over a week to work a large or rather, I should say. a small portion of a large electorate, and quite a novice on the platform, polled over 7000 votes, against two other candidates and strenuous opposition. I mention that fact because of the force it will become at the next election, supported as it is by all sections of the community. With regard to the banks creating money credit—a few authorities may clear the matter up. for those whose minds are not fossilised on the subject. M'Leod, in his “Theory and Practice of Banking states: “ The essential features of a bank and a banker are to create and issue credit, and this serves as money. A bank is not an oflice for borrowing and lending money; it is a manufactory of credit.” Devonport. x in “Economics of Enterprise/' says: “ Banks do not lend their deposits, but by the extension of credits create the deposits.” MTvenna, in '“ Post-war Banking,” says: “ Every loan and overdraft creates a deposit and every repayment of a loan or overdraft destroys a deposit.’ Hawtry, in “ Currency and Credit, states: “Practically all purchasing power come*? into evidence in the form of created credit, and it resumes the form of credit to be extinguished.” The Macmillan report states: “By granting loans, allowing money to be drawn on overdrafts, or purchasing securities, a bank creates money.” The Encylopaedia Britanuica (14th edition) has it thus: “Banks lend money n.v creating the means of payment out of nothing.” . , All of this conclusively proves the

Dougins contention—that banking is nothing more than mere bookkeeping, and that money is created by simple book entries. Indeed, the Encyclopaedia Britannica says: “Practically every business transaction is settled by cheque, i.e., by , a series of ledger .transfers— (book entries), nnd the whole is token on laith, notes and coins being but the small May I add, apropos of the Otago High School Board of Governors and its treatment of that able Douglas advocate. Miss H. M. King, that Douglasism bears uo relation to politics; we admit politicians or any citizen may support the Douglas credit proposals without weakening his allegiance to his economic “ class, political party, or religious denomination. .In fact, it is his privilege to discriminate within his own accustomed field, wherever it is.—l am, etc., W. H. Rhys, (Author of “Real Wealth and Financial Poverty ”)• Brisbane, December 26.